Tourism in South East Asia slows down as Chinese tourists opt to stay home

ad1

In the past couple of years, Chinese tourists have contributed to the tourism boom in Southeast Asia. However, there has been an abrupt decline in Chinese travelers that has affected the region.

“The slump in Chinese arrivals and tourism spending is being felt throughout the region.” said Bangkok-based head of economic and financial market research at Siam Commercial Bank, Kampon Adireksombat

“There’s always a concentration risk when relying on one market, and many countries may not be able to find a replacement for growth fast enough,” adds Adireksombat.

The tourism slump in the Southeast Asian region is expected to continue until 2020. The tourism boom has been affected by several factors since the first half of the year.

The tourism boom has dropped since the first half of the year due to the economic slowdown in China. The Chinese yuan has weakened to very low levels.

The intensifying trade war between the United States and China has affected consumer confidence. The economic decline has taken a toll on China’s domestic economy as spending on high-priced goods has also slowed down.

Over the past decade, there has been an income rise in middle-class Chinese consumers that have enabled them to travel more. This paved the way for China to be labeled as the world’s largest outbound travel market.

According to a McKinsey report, Chinese outbound tourists took about 131 million trips in 2017. This is more than double from 57 million trips back in 2010. More than 70% of Chinese tourists travel with their families and friends, exhibiting the highest international spending per trip among global travelers.

“South-east Asia is usually the first destination for Chinese travelers when they opt for further destinations,” stated the McKinsey report.

The slowdown in Chinese outbound tourism is now threatening the Southeast Asian tourism industry with overcapacity. This is after companies and governments invested millions of dollars into the expansion of hotels, resorts, and other travel facilities.

The shrinking number of Chinese tourists has already affected the hotel industry. For example, in Thailand, the Central Plaza Hotel has reported that it has experienced a slowdown in the second quarter due to the decreasing number of Chinese tourists.

In an investor’s briefing last month, the company’s senior vice-president Ronnachit Mahattanapruet that occupancy in its Thai properties has dropped to 7% in the second quarter.

This year, international tourist arrivals in Thailand has only grown 2%. This means that the country’s tourism industry might be looking at overcapacity.

The company operating Central Plaza Hotel said it has been working on adding 2,040 more rooms to its 6,678 hotel room portfolio. In Bangkok, the new $3.9 billion Ritz Carlton is expected to open in 2023. Hilton is set to have two new hotels to manage by 2022.

On the Thai island, Phuket, there will be 18% more hotel rooms by the year 2024.

While the current economic issues in China have is seen as a major contributing factor to the tourism slump in the Southeast Asian region, some other factors have contributed to the decline.

Among the emerging-market currencies, the Thai baht has strengthened the most against the Chinese yuan. This makes traveling in Thailand more expensive now for Chinese tourists. Also, a boat accident that killed 547 Chinese tourists in Phuket back in 2018 has affected confidence.

On the Indonesian island of Bali, its tourism promotion board’s deputy chairman Ngurah Wijaya admits that the tourist spot has become a victim of its success.

“Internal problems like traffic jams are among the main causes of the decline of Chinese tourists,” he said, adding that those who are still coming are staying fewer days and spending less.

“It also seems like they have started to get bored with Bali,” said Wijaya.

In Vietnam, the volatile bilateral tension with China may be a contributing factor to the decline of Chinese tourists in the country.

While there have been significant declines in the region, not every country is affected by this at all.

In Malaysia, tourists from China increased to 6.2% in the first half of the year, totaling to 1.55 million. In the Philippines, it has not seen any retreat in its hospitality projects as its tourism infrastructure and facilities are still in the under-developed stage.

To counter the decline in Chinese tourists, affected nations have been making efforts to attract visitors from other countries.

Vietnam will be setting up tourism promotion offices in Australia and Britain. There have also been plans for direct flights between India and Vietnam.

Earlier this year, Thailand has waived visa fees for India tourists. Thai hotel operators and airlines are also trying to strengthen connections between the two countries.

Leave a Reply

Your email address will not be published. Required fields are marked *